tv Nightly Business Report PBS August 12, 2014 6:30pm-7:01pm PDT
. this is "nightly business report" with tyler mathisen and susie gharib. >> retail read, walmart, macy's, j.c. penneys and kohl's, what to expect when the earnings are released. >> why a wall street darling may have a little tarnish on the gold seal of approval. >> healthy diagnosis, is the health care system ready for ageing baby boomers? the second part of the ageing in america series tonight on "nightly business report" for tuesday, august 12th. good evening, everyone. welcome. we begin with more signs that america's economy, while not humming for everybody in all regions and income levels is nonetheless on better footing than its been in years. just today, we learned july ease federal budget deficit was down to $95 billion and ten months
into the fiscal year the yearly budget short fall hasn't been this low since 2008. on the job's front, the labor department says more people are quitting their jobs. that's actually a positive since it means they either have or are confident they can get a new one. the federal reserve says the home mortgage market improved with banks easing up on lending standards for borrowers with good credit. the national federation of independent business reports smaller optimism ticked higher in july, a good sign as we push through the third quarter. this week we'll see if american consumers can keep the optimism on the up swung as some of the biggest retail chains post second quarter earnings. analysts are hoping for a big turn around from a disastrous start with wick kid winter weather keeping shoppers at
home. will this quarter be better, and which retailers will stand out? >> reporter: the retail earnings story is a tale of two. the bloomingdale stores is one of the higher end success stories. when it reports quarterly numbers tomorrow, analysts are looking for growth of 2.5%. oliver chen at city likes the stock even though it lagged the index this year because he thinks demand for macy's products is relatively consistent. >> i would say that i like cash flow. cash flow is always fashionable. we're recommending limited brand macy's. that's a name to think about. >> reporter: another higher-end fashion retailer nordstrom is due to report sunday. the first quarter growth was an upside surprise, though management has been careful with its full year guidance. caution is the common theme for lower end retailers like kohl's,
j.c. penney and walmart, all reporting on thursday. walmart's u.s. same store sales dropped last quarter for the first time in almost three years. this time around, analysts aren't looking for much in the way of growth, less than 1% for u.s. storms and just above 1% overall. earlier this year, kohl's looked to get a bump from the struggles at j.c. penney but showed in such gain in the first quarter. stock watchers will be looking for any hints on how back to school season is going for retailers. tom who keeps an eye on consumers says mall traffic has been up and shopping baskets a little bit fuller than they have been in the recent past. >> the consumers are hardened as to whatselect, what they buy, how they buy and the trade offs are significant than five, six, eight years ago. >> reporter: he says the rest of the year is going to be
extremely competitive for retailers which means more discounts and promotions for consumers and less profits for retailers some retail stocks should be in your portfolio? let's ask liz dunn. susie mention some of the companies out with earnings on thursday. macy's, pennies, kohl's, walmart, among the stocks, the ones that scoot to the higher end are ones you would favor with investment dollars? >> absolutely. i think low and middle income consumer is struggling. there hasn't been job growth or wage growth that we've wanted to see and certainly worse for that group of consumer. i think the high-end consumer is actually doing okay. there is a tremendous interest of branded goods that you would
find at a macy's or nordstrom. >> liz, if an investor has $10,000 and they want to put new money into some retail stocks, what would be the one stock that you would say is a definite plus and that it's going to go up near term? >> i am an analyst so i'm hesitant to say anything definite. if i had money to invest, i would invest in macy's. they are a gaming share, solid promotions, the consumer wants promotions, strong e commerce and strategy. they have tremendous expense discipline. they are buying back stock paying a competitive dividend. it's a great company and an attractive valuation. >> you're neutral on penny and under perform on kohl's. explain. >> yeah, pennies is in the midst of a turn around. they are expecting, i'm expecting to see solid comp
store sales growth from pennies. that's on the back of last year's disaster. if you like on a multi year basis, we're looking at sharp designs. we should see improvement, improvement in sales and growth margin. i don't want to fight the trend on terms of my rating. kohl's are seeing pennies take back market share but seeing market share losses to other channels of retail. the online channel, the math channel, off price channel. kohl's is stuck in the middle and i think that their value proposition isn't as strong as it has been. >> the big elephant in the room is walmart. i saw a headline today that said walmart would belly flop on earnings thursday. what is going wrong with walmart? >> well, i don't officially cover the company, so i can't comment specifically, but they sounded cautious on the consumers and the that low-end consumer that is walmart's is having the hardest time in the recovery.
they are not seeing job growth. they are not seeing wage growth and that's a challenge and they are seeing cuts to entitlement programs that walmart benefits from like programs like snap and so i think that consumer is challenged. i also think walmart competes head-to-head with some of the online retailers on price and there is a lot of price competition right now, and so walmart is challenged by, you know, players like amazon to sharpen the pencil when it comes to pricing. >> liz, thank you very much. liz dunn. a real reversal of fortune for one retail stocks. shares of high end designer kate spade spiked higher after posting better than expected quarterly earnings. it even raised its full-year guidance but as you can see here, shares plummeted closing down 25% of warning that gross margins for the year would fall as it faces increased competition. no steep drops in the major
averages today, jitters about russia's next move in the ukraine crisis had wall street investors on edge today a little bit. dow ended nine points lower, nasdaq off 12 and s&p shed three. crude oil fell closing just above $97 a barrel, west texas. that snapped a three-session winning streak and with good reason. the international energy agency cut the forecast for global oil demand while the u.s. energy information administration said the u.s. produced the most energy in july in 30 years. those factors turned and pressured energy stocks big time, especially oil and gas production names like southweste southwestern, chesapeake among the market's worst performers today. a mixed report card on the health of the u.s. economy from the s&p ratings agency. its keeping the overall assessment of economic risks unchanged but says key risk
factors subsided. the s&p projects total u.s. credit losses could decline by as much as $45 billion this year and home prices will continue to increase this year, as well. house price gains are slowing, the national association of realtors says prices grew 4.4% in the second quarter. that's the slowest annual pace since 2012, while 12 out of 173 metro areas posted gains, only 19 markets saw double digit rises, that's half as many as in the first quarter. the total number of sales slackened, too, slower price gains, good news for buyers trying to break into the market. the most expensive market in the country, by the way, san jose, median price $899,500. you can buy a couple teslas with that. shares of tesla closed at a record but will a not so glowing review dent the reputation? that's next.
some good news for farmers, the u.s. agricultural department is forecasting record-breaking harvest this autumn for corn and soybean crops. that put pressure on grain and soybean prices today. corn future's rose a bit because even though a record yield is forecasted, the outlook is slightly below expectations. it was pressure on shares of tesla today, but the electric car maker still managed to close in a fresh all-time high. that is despite the fact that consumer reports magazine which gave tesla's s model glowing reviews last year, now says it
found some minor problems with the car. >> whether or not the small problem or big problem, it's an inconvenience and you want a car, you expect the car to be problem free and there are many cars you can buy that are like that. it will be interesting with tesla as time goes on. >> so how bad are the problems and should drivers and investors be concerned? fill la b phil lebeau with more on the knock on tesla including what the auto maker has to say. phil, that gentleman earlier today said he had one of these cars for about 15,000 miles, so he had time to break it in or for it to break. >> it's not just him, tyler. consumer reporter bought a model s with the specific idea, let's drive it for a year like anybody else would and let's see what people think. it's a number of members of consumer reports driving the model s and the minor problems they encountered were things like the door handle flushed with the frame of the vehicle.
it's supposed to come up to open the car. it wouldn't come out a couple times. tesla was doing over the air software updates, which then allowed them to open the vehicle. one time the center koconsole wt blank so they had to do a hard reset for the model s. are these issues that stopped the people at consumer reports from driving the vehicle completely for days on end? no. every time tesla responded by fixing what was under warranty and getting the vehicle to operate as it should. however, these are nagging issues that were brought to the forefront by consumer reports and it raises the question of if i'm paying $90,000, tyler, i want that vehicle to perform flawlessly and not have nagging issues. that will be the issue for the next couple months. >> phil, exactly, you don't want your car on the side of the road when you spend that kind of money. are these just growing pains --
>> i can so. >> or is it much more serious? >> no, i think it's growing pains. there were increased production from basically 22,000 last year, it will be over 35,000 this year, by the end of next year, over 100,000 and as you ramp up production, you'll have occasionally problems that will pop up with a new vehicle. so this is what we're seeing, growing pains. >> thanks a lot, phil, phil lebeau from chicago. you can call this the ipo that wasn't after the stock had been trading for six session on the nasdaq, a biotech company called vascular bio was not investing. those who sold stock now have nothing to show for it. the company blames a key investor's failure to follow through on a commitment to buy shares for the cancellation of the initial public stock offering. >> schlumberger, i just love saying that name, is starting to
feel the pain of u.s. and european sanctions on russia and that's where we begin the market focuses. the largest oil services prov e provider says third-quarter earnings could be lower because personalities are restricting the engagement of people and equipment in russian operations, so says the company. that sent shares down 1% to 107. 87. boeing is selected to build prototypes of helicopters for the u.s. army. the first flight of the chopper is expected in 2017. the value of the contract, not disclosed. boeing shares down slightly despite the news to $120.47 shares of ut fell a fraction. the mortgage servicer aquin financial might have recovered weakness in accounting methods in a filing. the company said it would restate financial statements for the last year and the first
quarter because of the issues. the stock down about 5% to $25.16. and dendron to the lowest level ever after it warned there is a significant risk that it will not be able to repay debt that's maturing in 2016. the developer said it's considering alternatives to repaying the debt including options that leave shareholders with little or no equity in the company. shares of the small cap stock plunged about 34% today to a buck 40. shares climbing on better than expected second quarter earnings. the company said the cancer pain treatment helped bolster results. the stock was up nearly 5% to $31.85. exact sciences got the okay from the food and drug administration to sell the home colon cancer tests, the first to be cleared by regulators. it's one of the most common
forms of chanceer in the u.s. and this test gives patients another option for screening. the stock popped 2% to $17.46. and king digital, the maker of the popular candy crush saga game got crushed in after hours trading today. the social and mobile game maker reported earnings that metaphor casts but sales below estimates and the company lowered the outlook. after the bell, shares initially plunged by more than 20%. you can see it right there during regular trading shares were up slightly to 18.20. an update on the troubles for the struggling gambling mecca atlantic city and the fate of the newest casino. no qualified bidders came forward in the bankruptcy auction for the casino, it costs $2.5 billion to build and since it opened, it never has managed to turn even a quarterly profit.
the rebel will shut the doors september 10th and be at least the third casino to fold in ac this year. it might sound like something right out of the jetsons but it's real and here. one of the world's top hotel chains is using robots to deliver food and more. will they take over the workers and how does it change hospitali hospitality? >> reporter: from factory floors to driverless cars, the idea of robots taking over human tasks is not now. nearly 50% of u.s. jobs are at risk of being replaced by computerizati computerization. the company's parents say it isn't looking to eliminate staff but rather assist them with the help of this guy.
this is the very first bottler. the name is alo. the idea is to take time consumer jobs off the hands of front desk staff like sending items to guest rolls so the staff can be attentive to get needs and requests in person. >> from efficiency, it gives us much more efficiency and allows talent members to do what they are here for, which is serve our guests. >> reporter: the robot is designed by savio which received funding from the likes of google ventures but the company's ceo thinks robots can do so much. >> they can do simple things well and reliably over and over but they won't do all the things a person can co-. robots aren't going to replace people but basically be a productivity tool. >> reporter: this is just a pilot program, but star wood hotels hopes to roll them out to
nearly 100 locations around the world and as costs and sensors inside the robot comes down, the idea will be affordable. >> it will come in as $2,000 will be in that kind of range. it's not going to be hundreds of thousands or tens of thousands of dollars. >> reporter: as robots become more prevalent in day to day life, the question remains, do you have to tip them? for "nightly business report" in california, i'm josh lipton. >> i would tip them. they look kind of cute. to read more about josh's story and how star wood hotels is using robots, go to nbr.com. the impact baby boomers will have on the health care system as they age and what some of the biggest players in the industry are doing to meet their names. the second part of ageing in america is next.
it looks like its finally sinking in, more americans understand they have to save now to pay for their retirement later. a new survey shows nearly half of current u.s. workers say if offered, they would prefer to have lower pay now in return for higher employer contribution to their 401 k retirement savings account. >> a lot of people enrolled in insurance plans may need some extra money. premiums on state health care exchange plans will rise by a forecast average of 7.5% next year, this according to a study by a division of price waterhouse coopers. the highest proposed rate increase came where time insurance company enroll lees may see premiums rise 36%.
the health insurance industry adjusts the cost to consumers in the second year. we continue the four-part series called ageing in america. in part two tonight, we look at the impact what a rapidly ageing population would have on the u.s. health care system. meg terrell has the story. >> reporter: for the next 15 years, the baby boomer generation will turn 65 at a rate of about 10,000 every day and with older age come more health issues, conditions like high blood pressure, heart disease, arthritis and diabetes. >> it's estimated over 90% of seniors have at least one chronic disease. in fact, 77% have two or more. >> reporter: and the pharmaceutical incust industdus explaining. there are the top 15 diseases affecting seniors. more than double the number ten years ago. >> there is no question that diseases that affect the elderly
around the world, actually, are the fastest growing and some of the most difficult in the system and of course, we believe medicines and pharmaceuticals can make a difference for those patients. >> reporter: dave ricks leads the unit at eli lilly. he says much of the focus is medicine for the ageing, a shift from the past. >> the science and study of diseases of the elderly has, in fact, increased and therefore our about thety to look for medicines in that space have coincided with this underlying market demand in the elderly ageing population. >> reporter: one area remains particularly challenging, alzheimer's disease. the medicines currently on the market address just the symptoms rather than underlying cause and the industry seen several high-profile failures. still, they continue to work in the space. the number of medicines in development tripled from a decade ago as more than 36 million people world wide have dementia, a number expected to
grow without intervention. the swelling number of seniors will put pressure on health care costs. the number of beneficiaries is expected to rise to 52 million to 80 million and costs are expected to rise from 3.5% of gdp now to 5.6% in 2040. for "nightly business report", i'm meg terrell. >> tomorrow as we continue ageing in america, we look at companies that stand to benefit as the population grows older. >> finally tonight, something that's gone viral, the ice bucket challenge for als. people videotape themselves getting a bucket of ice water dumped on their heads and post it on social media and challenge someone else to do the same or they have to donate money to an als charity. watch. >> three, two, one. [ cheers ] >> and meg terrell got it, too. today top executives and
researchers at a boston area firm of finding a cure for the disease took the challenge and the national office of the als association says and this is really good news, it's received $2.3 million since the end of july, ten times what it took in over the same period last year. >> poor meg but that's -- you're a pharmaceutical reporter. you've got to have the ice bucket, part two. that's "nightly business repo " report", i'm susie gharib. we want to remind you this is the time of year your public television station needs your support. >> on behalf of your public television station, thanks for your support and we'll see you back here tomorrow.
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